Go Back  DVD Talk Forum > General Discussions > Other Talk
Reload this Page >

401K Account rebalancing - square up or let it ride?

Other Talk "Otterville" plus Religion/Politics

401K Account rebalancing - square up or let it ride?

Old 01-31-06, 03:14 PM
  #1  
DVD Talk Hall of Fame
Thread Starter
 
Join Date: Oct 1999
Location: not CT
Posts: 9,615
401K Account rebalancing - square up or let it ride?

Since my company has a pretty shitty 401K, I could lose every cent and be no worse off than I am today. I don't like to lose, but it wouldn't hurt anything but my pride.

As such, I chose some moderate to high risk funds to dabble in. Now, when I flip the form over, i come to the option where I can set it to reallocate all of my assests monthly, quarterly, semi-annually, or anually. WHat that means is that they will review my net worth at the specified time frame, cash everything out, and then reinvest it according to the percentages I specified on my enrollment form.

What should I do?
BigPete is offline  
Old 01-31-06, 03:21 PM
  #2  
DVD Talk Ultimate Edition
 
Join Date: Aug 2002
Location: MA
Posts: 4,661
If you are ages:
18-40: 100% equity (aggressive small/mid/large cap funds, International equity funds, etc.)

41-55: 65% equity (large caps, value funds, dividend paying funds) 35% fixed income (high grade bonds)

55-Retire: 35% equity (large caps, value funds, dividend paying funds) 65% fixed income (high grade bonds)

If you decide to reallocate, do it on a yearly basis. If it as you describe I would NOT elect to have them turn over my account. Pick your funds and forget about it for a few years.

Last edited by neiname; 01-31-06 at 03:23 PM.
neiname is offline  
Old 01-31-06, 04:28 PM
  #3  
Senior Member
 
Join Date: Mar 2000
Location: Dayton, OH
Posts: 435
I have the reallocate option with my 401k. Let's say I have a breakdown like so:

40% -Fund A
30% -Fund B
20% -Fund C
10% -Fund D

Let's say that Fund C just takes off, and accounts for 40% of my worth. Why would I want them to remove that money back down to 30%? If it's doing good keep it rollin'!

Likewise if Fund B just pluments and accounts for 15%, why would I want to put more money in something thats losing?

Keep in mind I'm 26, have only had this 401k for about 2 year, don't know much about it. So that's what my opinion is worth...
monkey42 is offline  
Old 01-31-06, 07:28 PM
  #4  
DVD Talk Hero
 
Join Date: Jul 2001
Location: MI
Posts: 25,043
Although diversification is good, reallocation involves selling winners to raise money to buy more of the losers.

I recommend that you reallocate manually based on a belief that a different mix of investments will earn a higher and/or safer rate of return going forward. Not a big proponent of "robotic" reallocation.

Last edited by OldDude; 01-31-06 at 07:40 PM.
OldDude is offline  
Old 01-31-06, 07:32 PM
  #5  
DVD Talk Hero
 
Join Date: Jul 2001
Location: MI
Posts: 25,043
Originally Posted by neiname
If you are ages:
18-40: 100% equity (aggressive small/mid/large cap funds, International equity funds, etc.)

41-55: 65% equity (large caps, value funds, dividend paying funds) 35% fixed income (high grade bonds)

55-Retire: 35% equity (large caps, value funds, dividend paying funds) 65% fixed income (high grade bonds)
While that is "conventional wisdom," I consider it horribly conservative. At retirement, you reasonably have a life expectancy of 20+ years. You don't need the money all at once, and basically you are still a long term investor. I think the ideal account has a lot more equity, but well diversified equity, not all in one basket and certainly not in "Enron" (or anything like it).
OldDude is offline  
Old 01-31-06, 07:38 PM
  #6  
DVD Talk Ultimate Edition
 
Join Date: Aug 2002
Location: MA
Posts: 4,661
Originally Posted by OldDude
While that is "conventional wisdom," I consider it horribly conservative. At retirement, you reasonably have a life expectancy of 20+ years. You don't need the money all at once, and basically you are still a long term investor. I think the ideal account has a lot more equity, but well diversified equity, not all in one basket and certainly not in "Enron" (or anything like it).

Good point.
neiname is offline  
Old 01-31-06, 08:14 PM
  #7  
DVD Talk Legend
 
Join Date: Aug 1999
Location: Chicago, IL
Posts: 17,205
I wish I could be 200% equity in my 401(k).
ChiTownAbs, Inc is offline  
Old 01-31-06, 09:14 PM
  #8  
DVD Talk Hero
 
Join Date: Jul 2001
Location: MI
Posts: 25,043
That might be a little TOO leveraged.
OldDude is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Thread Tools
Search this Thread

Archive Advertising Cookie Policy Privacy Statement Terms of Service

Copyright 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.